The current market likes to spin out capital guaranteed funds or scheme that supposedly provides ultra-low risks to investors. The duration of the funds varies, some from 3, 5 years and up to like 25 years!! As long as the investor does not withdraw prematurely, the capital is guaranteed.

I have sat through a number of session by people who supposedly wanted to help me to be financially secured by do a saving plan, investment plan cum insurance, blah..blah.etc. Because the competition is getting tougher nowadays, the financial institution is getting more creative in its marketing attempts. Note that these plans that i will discussed below are LEGAL plans/scheme/marketing ploy by major financial institution.

At first glance, the scheme/plan looks ultra attractive with good returns over the long duration period. But with further inspection, the returns are usually minute and even cannot beat our fixed deposit rate!!

Here are the major marketing ploys concepts that I heard so far. I let the readers figure out what the catch here. :)

A) For the 1st few years, the gain is super attractive. They can even can give you like 8% return for your capital. Below is an example: Lets say the plan requires you to put in RM5,000 annually throughout the plan. Thus, the bait you in, the first year, it is guaranteed to get RM400 on top with a "variable projected interest of 4%-8% ". The 2nd year, you will still get RM400 but on the end 3rd year you will get like RM5,200!!

1st- RM400 + "variable projected interest"

2nd- RM400 + "variable projected interest"

3rd -RM5200 + "variable projected interest

Thus, in 3 years you get a gain of 6000/15,000 * 100% = ~40%!! (To simplify lets assume variable interest is 0%)

That will surely got you hooked!!

If you continue for another 3 years, you will get the following:

4th - RM400 + "variable projected interest"

5th - RM400 + "variable projected interest"

6th - RM6500 + "variable projected interest

And you will say WOW!!

So i will earn like RM7300 for the 3 additional years where i invested another RM15K. Its more than the 1st-3rd year.

So in total 1st-6th year: 13,300/30,000 = 44.3%!!

And this will make your greed to boil up and continue the scheme for another 3 years where the 9th year you will get RM6,500 (you don't get anything for 7th and 8th year). You can continue further in the plan to get payout of RM6,500 for every 3 years for 12 years. (you will get 4 times payment). And if you continue till the end, at the end of the another 3 years you get like RM27,300!!!

I tried searching the website that sells this plan, it did not at all explain how the payment scheme/plan works. It just give a brief info on what the fund invests, who is eligible. I guess most companies let the persuasion work to be done by agents where it will be easy to "brainwash" a potential buyer if you talk to them face to face. Especially, those that weakness towards beautiful sales ladies.. Wink Wink. Because once the greed/lust subsides, the mind becomes clearer and will be more easier to catch on these marketing ploys.

2. Capital guaranteed modeled like a mutual fund with the attractive phrase that the selling prices will the MAXIMUM value the fund achieves through the duration of the plan. Example, you bought the fund at RM0.5 and if on 2010 the mutual fund price's NAV is RM2. A few year like ~10 years when the scheme is nearing maturity the mutual fund's NAV plummets to RM1. But because of these special feature of this plan, you get to sell your funds at the price of RM2 instead of RM1. And you pat yourself in the back because your capital is guaranteed and you get to earn additional extra RM1.50 (RM2 - RM0.50 (capital). So this plan is super safe in a sense that even if it plunges to 0.10. Your capital is protected and you got to sell upon maturity the highest prices the fund achieves which probably would not be RM0.10. At least you get your capital back.

If you withdraw prematurely, there will be some additional charges.

For number 2: You will not see the marketing ploy here unless you invested it in unaware like ME!!.(Good thing, I bought a very very small amount amidst heavy persuasion. That is another story :P ) When you just realized it, it really catches you in with your pants down!! . In my mind, I have an idea on how the plan going to pan out and there is a small small potential to profit handsomely from it. Small because if i can figure out, the smart fund managers should have thought of it also & plugged in the hole beforehand:P

Disclaimer: All characters and illustrated plans/scheme appearing in this work are fictitious. Any resemblance to real persons, living or dead, is purely coincidental. The author's work is not an advice to buy/sell/reject any product.